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Investing.com - William Blair reiterated its Outperform rating on Atlassian Corporation (NASDAQ:TEAM) on Thursday, maintaining a positive outlook despite recent stock pullbacks in the software sector. The company, currently valued at $43.91 billion, shows impressive gross profit margins of 82.84% according to InvestingPro data.
The research firm notes that Atlassian currently trades at 24.5 times William Blair’s calendar 2026 free cash flow estimate and approximately 6.6 times its 2026 revenue estimate, representing a slight discount compared to large-cap software peers. Analyst price targets range from $196 to $480, suggesting significant potential upside.
William Blair indicates that despite Atlassian’s strong fundamentals, the stock has experienced a pullback due to broader sentiment in the software sector and concerns about artificial intelligence risks, particularly related to software developers. InvestingPro data shows the stock has declined 37.62% over the past six months, though revenue growth remains robust at 19.66%. Get comprehensive insights and 8 additional ProTips with an InvestingPro subscription.
The firm believes these AI-related risks are "overblown" in the near to medium term and maintains that Atlassian is well-positioned for growth exceeding 20% over at least the next couple of years, with healthy free cash flow generation.
William Blair identifies several risk factors for Atlassian, including competition, enterprise sales execution challenges, and potential lumpiness in billings.
In other recent news, Atlassian Corporation reported its Q4 2025 earnings, which exceeded analyst expectations. The company achieved an earnings per share of $0.98, surpassing the projected $0.81, resulting in a 20.99% surprise. Despite this positive earnings report, the company’s stock experienced a decline in after-hours trading, which some attribute to broader market volatility and concerns over future guidance. Additionally, Atlassian announced a significant acquisition, entering into a definitive agreement to purchase The Browser Company of New York for $610 million in cash. This deal includes The Browser Company’s cash holdings and aims to expand Atlassian’s capabilities. Raymond James reiterated its Outperform rating for Atlassian, maintaining a price target of $250.00 following the acquisition news. These developments highlight Atlassian’s ongoing strategic initiatives and market performance.
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